Flood insurance rates bubbling higher

Don't Waste Your Money

Homeowners in communities across the country have been receiving notices telling them that they must purchase flood insurance.

Or, if they are already in a flood zone, many are learning that their flood insurance premiums are about to jump substantially.

Why? And can you do anything about it?

Living Near Creek Costly

Cindy Meyers showed me the creek near her home that is now going to cost her hundreds of extra dollars a year.

It's Cincinnati's Mill Creek, and Cindy lives just one block away, in Reading.

She's always had to pay a few hundred dollars in flood insurance, but now those rates are skyrocketing.

Cindy said, "I received a letter stating I have 45 days to comply with an increased insurance coverage for floods, which is almost double what I have now."

Her annual flood insurance will jump from $600 a year to almost $1,200.

She said, "I thought it was insane. Especially in this economy, how could they ask people to pay that much extra?"

FEMA Expands Flood Zones

Its the result of FEMA redrawing flood maps following Hurricane Katrina. The zones have expanded greatly.

Cindy's street is now considered more risky, even though her street hasn't flooded since the Great Flood of 1937.

Thousands of other homeowners are now in flood zones for the first time.

Chris and Kate Howarth last summer told me they now have to pay $2,000 a year, even though the creek near them has never flooded.

FEMA has issued a statement saying "federally regulated lenders must now require flood insurance in designated flood zones." So if you are in a newly declared flood zone, and have a mortgage, you must pay.

However, you can appeal to FEMA for a new "zone determination" which could return rates to the old levels.

Cindy plans to appeal. But until then, she has few options. She said, "you could move, but now you can't sell your house, because who wants to pay that?"

What You Can Do

FEMA also tells me premiums are up because you may now be required to have insurance that will cover the full replacement cost of your home. While FEMA would not comment on her case, it appears that is what happened in Cindy's situation.

Whatever the reason, your best bets are to:

  • Write to your lender and FEMA to appeal their decision.
  • Also contact your Congressman and local officials, who may be able to help.
  • And talk to neighbors, who may be able to band together and hire an attorney, if several of them are facing the same premium hikes.

That way you don't waste your money.

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